Four out of five commissioners reportedly believe Google broke antitrust laws.

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A Reuters report, citing three anonymous sources, says that the Federal Trade Commission is on the verge of launching an antitrust lawsuit against Google. "Four of the FTC commissioners have become convinced after more than a year of investigation that Google illegally used its dominance of the search market to hurt its rivals, while one commissioner is skeptical," Reuters reports.

Rumors of the FTC investigation surfaced last year. While the details of the investigation are secret, Reuters notes that several firms, including Yelp, have publicly complained about Google's business practices.

Last-minute negotiations between Google and the commission could avert a formal legal battle. But time is short. Jon Leibowitz, the chairman of the FTC, has stated that he expects to wrap up his investigation of the search giant before the end of the calendar year. Two of the sources who spoke to Reuters confirmed that the agency is still planning to make its decision before the new year.

The Reuters report was corroborated by The Hill. That publication reports that the FTC's investigation focuses on "whether Google manipulates its search results to ensure that its own services, such as YouTube, Google Maps, and Google Plus, appear above those of its rivals." It says an announcement on the subject is expected after the November elections.

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These issues came to light a year or so ago when the Senate held antitrust hearings into Google's anticompetitive practices. Here's a pre-hearing background piece from the NYT, complete with Netscape analogies. Then during the hearing Eric Schmidt flat out denied that Google rigs its search results. Yelp and TripAdvisor testified otherwise and that they were threatened by Google with search lockouts, that Google copied their user reviews to flesh out Google Places, and had their sites discriminated against in search results. Other companies like NexTag made similar claims.

One does not have to be a monopoly to trigger antitrust scrutiny, the actual criteria is to have "market power." Like a monopoly, it is not illegal to achieve market power, it's just illegal to abuse it in an anticompetitive manner. There's no question whatsoever that Google has market power in the online search/advertising market. The only question is whether they've abused it to muscle in on other markets.

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I was thinking of the iPod and iPad. Looked it up just now, and there is an anti-trust case in the works regarding the iPod, and there was some ebook case presumably related to the iPad (62% market share so far). Apple has hired an anti-trust specialist.

There is potential for anti-trust in Apple's strong presence in several different markets, if you ask me. They may have balanced it out so far, more or less, but their whole "ecosystem" thing has anti-competitive implications.

It is not as if Google takes me to *GMail* when I type "email" in it's search box OR to *Google Play* when I type "ebook", "book", "music" or "movie" ! More often than not the top result have nothing to do with Google's product. Often Google's "offering" of the service related with a search is listed #5 or beyond.

Google should be under no compulsion to put results of searches so that is skews the reality of what results people actually want to see. Already they give pretty good results to partial sentence queries, and even one/two word queries. They just re-rank the results on a weighting factor depending on what people eventually click from among the results. That is just their method of improving their searches. To all those "allegendly* great businesses who aren't on the top of the page in Google's results, guess what - you actually *are not* as popular as you think you are - at least among those who search in Google.

As for harming the competition in the Search engine market, if the the competition are sleeping and hoping that their algorithm from 1993 is going to mint them advertisement money - wake up - Google ate your lunch in the last millenium, this is 2012 !

As a web developer, my experience dealing with Google's search team hasn't been great. But I'm not entirely sure what Google can do to solve it.

The basic problem is, at any time, a small change to google's algorithm can send a thriving business bankrupt, and google is making changes like that all the time.

If you complain to google, they automatically assume you are some kind of spam company and ignore you.

Most of the time, everything is great and Google does a great job of finding legitimate businesses. But every now and then something goes really wrong and they don't do anything to fix it. In my opinion, something needs to be done about it, it is causing serious harm to small/medium size businesses all around the world.

I don't care who is at fault, I don't really blame Google, and I'm not sure how it can be solved. But it is a real problem and I'm glad someone is looking into it.

The other side being that there are thousands and thousands of actual spam companies trying to insert themselves higher in the rankings. Any static form of ranking is going to eventually going to be overrun by them.

Even if you assume Google is totally angelic, if they are going to rank sites, some sites are going to end up below others and some are going to end up on the second page. If they ever change the rankings, some sites are going to go from the first to the second slot (and take a 50% cut in visitors or whatever the stat is) and some sites are going to go from the first page to the second (and take some even bigger cut then). What solution can there be to that problem?

I'm neither a Google fanboy or hater, and I support issues of Net Neutrality. However, I would like someone with a little legal background to explain what the case against Google is, because it's not at all obvious to me (or apparently most of the comments so far).

How is Google a monopoly? Not only are there a number of alternative search engines, but the bar to entry is relatively low for both developers and users.

This is completely different scenario from the Microsoft Windows a decade ago where they not only controlled 90% of the market, but it's a very high bar to entry into the market - it takes huge resources to create an OS, and it's very difficult for users to switch OS platforms.

So why shouldn't Google be able to promote their own services above others in their own search engine? How is this so different than a store promoting the store brand over others? If users don't like it, what prevents them from switching to a different search engine. I could see a problem if Google was actively targeting competitor websites to not show up at all, or purposely burying them where they would practically never be found.

Frankly, I don't think Google does enough as it is to filter out a lot of the crap sites like "Yahoo! Answers", etc.

It is not as if Google takes me to *GMail* when I type "email" in it's search box OR to *Google Play* when I type "ebook", "book", "music" or "movie" ! More often than not the top result have nothing to do with Google's product. Often Google's "offering" of the service related with a search is listed #5 or beyond.

To use your example, if I go to www.google.com and search for "email", Google's GMail service is listed 3rd, preceded by a Wikipedia link and a link to Yahoo Mail [go figure], and followed by links to email.com and Hotmail.

Doesn't seem like it's artificially promoting its product in that case... And their properties don't even show up if you search for 'ebook' or 'music'.

The other side being that there are thousands and thousands of actual spam companies trying to insert themselves higher in the rankings. Any static form of ranking is going to eventually going to be overrun by them.

Yeah, this is true. And google needs to do everything it can to ignore those guys. Where they run into trouble is when a legitimate business gets flagged by their computer systems as spam.

MrMalthus wrote:

Even if you assume Google is totally angelic, if they are going to rank sites, some sites are going to end up below others and som are going to end up on the second page. If they ever change the rankings, some sites are going to go from the first to the second slot (and take a 50% cut in visitors or whatever the stat is) and some sites are going to go from the first page to the second (and take some even bigger cut then). What solution can there be to that problem?

I'm not so much talking about people moving from 1st position to 2nd position or even from the 1st page to the 2nd page. I have seen websites go from the 1st position to completely vanishing from the listing. You literally have to put `site:foobar.com` in your search to find anything from their website.

Even if you search for their exact company name and use automated tools to scan back several thousand pages through google's search results, you still don't find their website listed. But they used to be the first result on the first page.

These are often real businesses, with 30 or 40 employees, who suddenly see a 95% drop in sales. And when they contact Google, they are often ignored. I know one of our clients took *three years* to get Google to fix a problem like this. For all of that time, they were relying entirely on other forms of income (including a Google Adwords budget of tens of thousands of dollars per week, for years). Then one day google flicked a switch and they jumped back to the first result on the first page.

Google probably can't be held liable for damages like that, but it definitely is bad for the economy.

And it's a lot worse when someone like Yelp, who probably received a significant portion of their revenue via Google, suddenly finds a massive drop in their income on the day that Google launches a direct competitor. In that case, I think google can be held liable. A giant needs to be careful where they step, or else they will crush someone.

The basic principle is abuse of market power in one market to reduce competition in another market.

It doesn't matter if there are other search engines, or if it is relatively easy to start a new one. The main question is whether Google uses its search-engine market-share dominance to reduce competition in other markets like provision of video.

No kidding. I'm waiting for the day Yelp goes down in flames when those get exposed. That said, Yelp is still useful enough for me...

Quote:

. But as a user, I *love* that. I can't stand when a search for a result just sends me to another search page, with possible links to results. I want an answer, and if I wanted another search engine, I would have searched for "price comparison search engine" or something.

I would like someone with a little legal background to explain what the case against Google is, because it's not at all obvious to me (or apparently most of the comments so far).

So far there isn't one. If a suit is filed I'm sure there will be plenty of talk about the merits, but so far all we have is people guessing about what might be the issue(s) and why that should or shouldn't be illegal.

The basic principle is abuse of market power in one market to reduce competition in another market.

I sincerely appreciate you addressing my question. However, looking at the Wikipedia article you linked to just further confuses me (and you're under no obligation to try and rectify that ;-) ).

Not to be argumentative, but the wiki article seems to indicate that the source of market power is that monopolies have no competition, and the barriers to entry are significant... which as I pointed out, doesn't seem to be the case with search engines (at least not obviously so). I'm probably just misunderstanding some key concept, but interesting anyway.

It doesn't really matter if it is easy for people to compete with Google Search or not. It just matters if Google actually has market-share dominance in that area, and if they use it to make it harder for people to compete with them in other markets.

The basic principle is abuse of market power in one market to reduce competition in another market.

It doesn't matter if there are other search engines, or if it is relatively easy to start a new one. The main question is whether Google uses its search-engine market-share dominance to reduce competition in other markets like provision of video.

It's going to be interesting to see what kind of changes they would want for google to not "hurt their rivals". One key part is:

Quote:

While the details of the investigation are secret, Reuters notes that several firms, including Yelp, have publicly complained about Google's business practices.

The Reuters article actually mentions Yelp and Nextag, a price comparison site. I get how they feel hurt by google…

There are all sorts of complaints to the FTC and/or other regulatory agencies. Some of them, like Amazon's complaint about iBooks, may even motivate the regulators to do something (although the complaint may serve better to give the FTC a handy contact for an investigation); some others amount to exactly nothing.

You have the same standing as Yelp or Nextag. Don't like a company's way of doing business? Write a letter.

So it's going to be interesting to see what the FTC says. Maybe they'll figure out something good.

You think?

Reuters' article wrote:

convinced after more than a year of investigation…

Naw, Reuters probably just made that up; last weekend a bunch of hacks decided that they needed to show that they were busy destroying business on the planet, so dreamed up how to make the biggest splash.

I predicted this more than three years ago. More than that, I was thinking back then about how our perceptions of a company slowly change over time ... and how does that slowly morph into the idea that the company has gone from being a hot new thing to an evil monopoly.

Only three years ago, the idea that Google might just be abusing evil monopoly powers ... I mentioned this idea to various people in my circles. It was always just dismissed with a laugh. But it's very possible, now, that people would have stronger, more defined opinions. And it's possible that in a few years, 'Google = Evil Monopoly' could become a very popular perception. I'd guess that starting now, there's about a 50/50 chance of that happening.

And for most people, it's going to be about gut feeling. Not about some technical, repeatable, or measurable definition of what actually constitutes an Evil Monopoly.

Now look at whether Apple's hardware dominance in certain segments leads to unfair competition re. its media and app sales.

Let's have a theory: how has iPod hurt music businesses unfairly, i.e., in a way that some other music player that got a big share wouldn't have? Oh, and with almost every phone in the world being capable of MP3s, what share of portable music does Apple actually control?

"whether Google manipulates its search results to ensure that its own services, such as YouTube, Google Maps, and Google Plus, appear above those of its rivals"

You mean, when a company promotes its own interests on its own website?

The problem though is that Google has an alleged monopoly on web search, and that it's using its monopoly position to give more visibility to its less-successful ventures than it otherwise would be able to if it was not in a monopoly position.

Yes, I think that's the nature of the allegations. Not that such finesse is likely to work in the mind of somebody who's not used to dealing in fine points of law and business.

I disagree that Google has a monopoly. It is possible to have 90% market share and still not have a monopoly.

Interesting. Maybe a lawyer will chime in about standards these days, but I think that your distinction is not likely to matter. When I looked up the EU Competition Commission's standards recently, they were written around “dominant market power” and the misuse of it.

On a side note, what i the likelihood that the FTC commissioners actually understand anything about the technology involved?

As a side note, what are the odds that a tech site featuring comments from somebody who misspells per se knows anything about legal matters? And pray tell, what are the unique tech features that are so sophisticated and complex that an organization dedicated to enforcing laws about business practices, wouldn't understand

First off I am a Google fan for the most part I enjoy and use many of their products and have convinced many people to do they same based on technical merits. However, having read all of the comments above I feel compelled to offer a disenting opinion. I could write a research paper on this topic. It's an incredible thought experiment from many perspectives. I remain a Google fan for many reasons and I don't necessarily fault them for this situation. I'm also not looking forward to the remedy from the justice department. That said after waffling for several years about this topic, like the justice department I too came to the conclusion that Google is a monopoly they are causing harm and I think I've got partial solution to the problem which is very much more complex then there is time to describe.

Google clearly has monopoly control of the search market, but it is arguable whether that they could extract a price increase since it is free and essentially always has been. But there are many other markets that are around the search product as well like advertising which is where they make their money. So what market the justice department calls out Google for having a monopoly could be interesting.

Google has used it's monopoly to promote their market share in Maps, Video, Social, Pricing engines, and I'm sure other markets. All of these markets existed outside of search before Google integrated them into the results page. Competition in these markets is harmed by google's decision to integrate the data directly into the results page. Arguably many of these were innovations that were to the user's benefit but still harmful to the market now and possibly the user as well in the future.

In the case of social I expect one of the reasons the "social" results appear in the ad space instead of the search results is to prevent the argument that they're using they're using the search monopoly to gain market share in social.

Google unfortunately should not have been allowed to acquire youtube either. At that time google was driving the majority of the traffic on the web and was allowed to acquire the number 1 video sharing site on the web when their own video product was failing. Again I think up to this point Google's acquisition has been beneficial to the end user, but there are competing video services that are likely harmed by this.

As google places more and more data rather then links in the search results companies are going to be hurt by this. The question is what the remedy is. It is crucial that Google be allowed to continue to innovate their search results page as arguably it mostly benefits the user. But there should be a mechanism to allow the user to choose either the source of the data or the destination of the link. At some point Google has made the decision that what you are searching for is a place and then says ok lets insert a place result in the search result listings. The choice of the source of the data for the place result listing or the design within the frame or the destination for the link needs to allow for competition. It is arguable that there are many sources of the exact same information in the listing of a business, and their decision to present that information from a google source instead of a competitor is monopolistic. There needs to be a framework where the user can choose the source of the data in the search listings and where competing services can offer data to insert into the results page instead of Google's services..

Sooo... a company builds up its product, gathers market share, spins off other products, and then promotes said products instead of selflessly putting the competition above themselves. Yeah, that must be a violation of some sort....

Not to be argumentative, but the wiki article seems to indicate that the source of market power is that monopolies have no competition, and the barriers to entry are significant... which as I pointed out, doesn't seem to be the case with search engines (at least not obviously so).

Well, Google has a patent on their original ranking algorithm, and more CPUs than God. Their only would-be competitor is the former biggest software company on the planet, which was unable to crack Google's first-mover, technological and IP advantages, so they lose money on the effort.

I'd say doing search well enough to make a real business of it is REAL HARD. I don't recall seeing a lot of heavily-funded startups tackling this area; rather, I see Google buying up or building competitors to their lesser-known projects.

I'm not arguing about legality, just the nature of the business today. Unless you can get a government the size of China to grant you a monopoly, how're you going to make it in search?

I was thinking of the iPod and iPad. Looked it up just now, and there is an anti-trust case in the works regarding the iPod… their whole "ecosystem" thing has anti-competitive implications.

Yeah, these things drag on forever.

The complaint that I found on WIkipedia alleged that Apple jiggered their system to make it impossible to download other music than from iTMS. Of course, that was never true, and is even less so today. (Some fraction of my iPod music is Amazon MP3s.)

And these cases are weakening by the day. Almost every piece of electronics you buy these days — down to thumb drives! — have MP3 players built in. What market power does Apple have if it sells AAC-encoded files that most non-Apple music devices ignore, encouraging those people to rip their own or buy from others?

Computer users are overwhelmingly more likely to click on the top results in any search. The low ranking often forces companies to buy more ads on Google to improve their visibility, one source said.

So if the source has it right, the concern is that Google promotes its own properties in the rankings of non-advertising listings.

Another Arsian with better memory might help us here: wasn't this alleged, denied, evidence found, and some “rogue” group inside Google found to have accidentally done this, which was undone? Maybe Google, which seemingly has a loose command & control structure, has inadvertently allowed the practice to continue.

Reuters wrote:

Two of the sources said a decision on how to proceed could come in late November or early December.

Google has used it's monopoly to promote their market share in Maps, Video, Social, Pricing engines, and I'm sure other markets. All of these markets existed outside of search before Google integrated them into the results page. Competition in these markets is harmed by google's decision to integrate the data directly into the results page. Arguably many of these were innovations that were to the user's benefit but still harmful to the market now and possibly the user as well in the future.

Google has a 65% market share and falling, due to Bing.

For me, Google offers better results, better side services, and great integration among services. If offering quality is an anti-trust issue, I'm not sure what to say other than MS still has a 91.7% market share(desktop) and Bing isn't getting anti-trust allegations.

Google: We'll offer free or very cheap services of the highest quality, track your usage patterns and show you ads that save you money.. OMG!!! EVIL!!

I think Comcast and AT&T should be allowed to rule the world, so we can get crappy services for a high price.

It's going to be interesting to see what kind of changes they would want for google to not "hurt their rivals". One key part is:

Quote:

While the details of the investigation are secret, Reuters notes that several firms, including Yelp, have publicly complained about Google's business practices.

The Reuters article actually mentions Yelp and Nextag, a price comparison site. I get how they feel hurt by google…

There are all sorts of complaints to the FTC and/or other regulatory agencies. Some of them, like Amazon's complaint about iBooks, may even motivate the regulators to do something (although the complaint may serve better to give the FTC a handy contact for an investigation); some others amount to exactly nothing.

You have the same standing as Yelp or Nextag. Don't like a company's way of doing business? Write a letter.

It's not clear to me why you're responding to my post. I singled out Nextag because a) they were mentioned in the linked article, b) they were featured in the Senate hearings last year, and c) they served as a specific example for a class of the companies that have lodged complaints, allowing me to use their complaints as context.

For me, Google offers better results, better side services, and great integration among services. If offering quality is an anti-trust issue, I'm not sure what to say other than MS still has a 91.7% market share and Bing isn't getting anti-trust allegations.

Google: We'll offer free or very cheap services of the highest quality, track your usage patterns and show you ads that save you money.. OMG!!! EVIL!!

So because Google is a company that makes great products and gives them away for free, they shouldn't be held to task if they may be committing antitrust violations? If they made lousy products would you feel the the investigation of antitrust violations that might be true would be more appropriate?

Based on over a year of inquiries, the FTC may come to the conclusion that anti trust violations have occurred. If Google is innocent then nothing will happen to them. If they are guilty, they should be taken to task. It's really that simple in my opinion. The fact that they also make great software is completely irrelevant.

These issues came to light a year or so ago when the Senate held antitrust hearings into Google's anticompetitive practices. Here's a pre-hearing background piece from the NYT, complete with Netscape analogies. Then during the hearing Eric Schmidt flat out denied that Google rigs its search results. Yelp and TripAdvisor testified otherwise and that they were threatened by Google with search lockouts, that Google copied their user reviews to flesh out Google Places, and had their sites discriminated against in search results. Other companies like NexTag made similar claims.

One does not have to be a monopoly to trigger antitrust scrutiny, the actual criteria is to have "market power." Like a monopoly, it is not illegal to achieve market power, it's just illegal to abuse it in an anticompetitive manner. There's no question whatsoever that Google has market power in the online search/advertising market. The only question is whether they've abused it to muscle in on other markets.

So it's going to be interesting to see what the FTC says. Maybe they'll figure out something good.

You think?

Reuters' article wrote:

convinced after more than a year of investigation…

Naw, Reuters probably just made that up; last weekend a bunch of hacks decided that they needed to show that they were busy destroying business on the planet, so dreamed up how to make the biggest splash.

There's no reason to assume that the length of an investigation correlates with the quality of its results, but that's irrelevant to my post, because my post had nothing to do with the quality of the investigation. I was discussing the difficulty of defining "fair search" and the minefield that will be intervention in the marketplace. Something that is actually quite interesting to contemplate, even if it doesn't fall out like that.

Maybe you should do some introspection on the tone and arguments you've contributed to this thread? You win for making the most posts, but you're talking past each poster you're responding to (and usually being a dick in the process).

Now look at whether Apple's hardware dominance in certain segments leads to unfair competition re. its media and app sales.

Let's have a theory: how has iPod hurt music businesses unfairly, i.e., in a way that some other music player that got a big share wouldn't have? Oh, and with almost every phone in the world being capable of MP3s, what share of portable music does Apple actually control?

Or perhaps that they put their software, search, ads, portals, etc. on the mobile OS that powers the great majority of smartphones…oops, wrong company.

I think it's more about Apple anti-competitive practices that lead to monopoly behavior.

Apple lawsuits over vague patents, and their patenting even more vague things (I heard Apple just got another slide to unlock patent, this time for moving an icon to another space to unlock). These patents and patent lawsuits have been very anti-competitive and will help pave Apple to a monopoly. There are rumors of Samsung and other Android phone makers looking at using WP8, only due to Apples "thermonuclear" lawsuits. This is anticompetitive actions leading to a monopoly. There was also another company that makes business apps that after the Samsung trial that stated they aren't going to make Android apps now, because of Apples anticompetitive actions here (I read it on a news application so I can't remember who wrote it or the company name).

And it's things like this is why more people are thinking the FTC should be giving Apple a long, hard look. Apples actions have all the signs of monopoly behavior.

And before we get people trolling about the whole Samsung vs Apple trial, don't bother. It's about more then just that one case, it's about how almost all of Apples mobile lawsuits are against Android developers and only on their Android devices. This is hurting Android makers and developer. And it hurts any competition that wants to use Android since anyone small is getting worried will Apple with its huge warchest will sue them next into oblivion. IE, monopoly behaviour. And Android is the only real competition Apple has at the moment.

...whether Google manipulates its search results to ensure that its own services, such as YouTube, Google Maps, and Google Plus, appear above those of its rivals.

And how/why is this illegal? I have search results, and I want to make sure people purchase products from my suppliers so I make more money. So I make sure my search results appear near the top. Seems logical to me.